Disclosures, tenant/landlord issues and short sales and foreclosures, hot topics today in light of the changed housing market, were discussed by a panel of legal experts at a Silicon Valley Association of REALTORS® district tour meeting last month. Panelists included real estate attorneys David Marks, who focused on the issue of disclosures; Jeffrey Hare, who discussed short sales and REOs; and Nancy Chillag, who discussed tenant/landlord issues in light of the foreclosure situation.
Marks, a real estate attorney with Miller Starr Regalia in Palo Alto, could not stress enough to REALTORS® the importance of "full disclosure of everything and anything" that may impact the value of a property. He said Realtors need to make sure their clients fully complete the disclosure forms themselves. The seller needs to disclose all repairs done to the home in the distant or recent past, of which the seller has knowledge.
"The more you disclose, the better," Marks said.
Marks also cautioned about using the word "repaired" versus the word "repairs," noting the courts have made a distinction between these words. "Repaired" means the problem has been taken care of for good, "forever."
With regard to inspections, agents are not obligated to actually seek out reports of past inspections, but if they know of their existence, they need to disclose it. Homeowners need to disclose findings of past inspections they had undertaken while living in the property. Marks also noted the REALTOR® has disclosure obligations to other offers.
Nancy Chillag of Chillag & Associates in Menlo Park said tenant/landlord issues are changing rapidly in light of foreclosures, as many tenants receive notices to vacate because the owner of the property has not been making the mortgage payments. She said the federal Protecting Tenants at Foreclosure Act of 2009 now requires that tenants receive notice before being forced to leave following the sale of a foreclosed home.
If a bona fide tenant resides on the foreclosed property, the tenant cannot be evicted before the expiration of the lease term; but if the lender or party buying at the foreclosure sale intends to utilize the property as a primary residence or sells the property to a new owner to use as a primary residence, the tenant can be evicted with 90-days notice. Ninety days notice to vacate is required when there is no written lease or when the lease is terminable on short notice, like month to month. When a tenant has a Section 8 lease, the latter is honored.
Chillag said banks are more amenable these days to negotiating to keep the tenant in the property in order to protect property values and avoid "ghost towns." There is also the cash for keys program, in which tenants are offered cash to move out of the property.
Discussing short sales and REOs, San Jose real estate attorney Jeffrey Hare said loan modification scams were a big problem until Governor Schwarzenegger signed SB 94, which prevents anyone from receiving advanced fees for the service. He stressed when a sale involves foreclosures and short sales, REALTORS® need to advise their clients to have an attorney review all the documents.
In the case of short sales, Hare said problems arise when properties have two or even three loans against them and whether these are recourse or nonrecourse loans. Many people don't realize if they modify or refinance a loan since purchasing their home, the loan becomes a recourse loan and they may still be liable for the "losses absorbed" by the lender in the transaction. He explained in a short sale or foreclosure, the debt of a recourse loan does not go away and the debtor can still be sued.
Hare also warned REALTORS® of the latest scam – foreclosure consultants who are not licensed and unqualified.
"Watch out for these scams as desperate homeowners are turning to them for help," Hare said.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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